•NACCIMA, CPPE urge FG to remove ‘sugar tax’

The President of the Lagos Chamber of Commerce and Industry (LCCI), Gabriel Idahosa, has decried the rapid decline in the country’s manufacturing and agricultural sectors.

He added that the decline in both critical sectors is responsible for the sharp increase in food inflation. Speaking during the State of the Economy Address in Lagos, he said food prices in June increased by 40.87 per cent from 40.66 in May year-on-year, implying a 0.21 per cent rise. The inflationary surge, particularly in food prices, he revealed, poses a significant challenge to the economic well-being of Nigerians. He added that these inflationary pressures exacerbate the precarious living conditions of millions of Nigerians and further amplify social and economic vulnerabilities.

The Q1 2024 GDP report showed that growth in agriculture, Nigeria’s largest single economic sector and employer, remained very weak at 0.18 per cent compared to 2.1 per cent in the previous quarter. This reflects a marginal growth of 1.71 per cent in crop production and contributed over 91 per cent of the total output in the sector. Idahosa added that both the livestock and fisheries sub-sectors recorded weak performance.

“The manufacturing sector also continues to struggle, recording a weak growth of 1.49 per cent in the first quarter compared to 1.61 per cent in the corresponding quarter of 2023. The weak performance is obviously due to weak consumer demand due to weakened purchasing power and high cost of production due to FX illiquidity, high interest rates among other problems,” he stated.

At the same time, the Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Sola Obadimu, has urged the federal government to permanently suspend the N10 tax on sugar-sweetened beverages (SSBs).

The government is currently looking into a temporary suspension as part of an economic stabilisation plan for businesses. The tax, signed into law as part of the 2021 Finance Act, adds N10 per litre to all non-alcoholic and SSBs.

“We have a coordinating minister for the economy, we have key stakeholders that cover businesses and manufacturers, why are things not thought through and stakeholders consulted before making pronouncements?” Obadimu queried.

Supporting the NACCIMA DG, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the tax should be removed permanently and is in line with what the Presidential Committee on Tax Reform (PCTR) has been advocating.

He said there are too many levies and taxes placed on manufacturers and considering the numerous challenges manufacturers are facing, it is better to remove the tax permanently.

“Sugar is not such a big problem that should warrant this kind of levy. Sugar is in almost everything including pharmaceutical products. If we take into account macroeconomic headwinds, regulatory issues and structural issues that beverage manufacturers are facing currently, they need the reprieve they can get,” he said.

On managing the persistently high inflation, Idahosa recommended that monetary and fiscal authorities focus on the factors driving the inflation rates by tackling supply-side deficiencies instead of focusing on demand-side management.

He said: “We urge the CBN to be consistent with FX market reforms until we see the desired impact on the rising inflation rate and burdening high interest rates. We also recommend the CBN explore alternative policy measures that promote credit access, stimulate investment and support entrepreneurship. This could include targeted interventions such as concessional lending facilities, loan guarantees, and interest rate subsidies tailored to the needs of MSMEs and key sectors of the economy like agriculture, manufacturing and power technology.”

On power supply, he urged the government to create the needed environment where local meter manufacturing can thrive to bridge the current gap in meter deployment as this will reduce the pressure on FX, create jobs, generate revenue and develop local expertise in meter manufacturing.

He pleaded for cheaper duty rates for importing agricultural inputs for local manufacturing and investment in building agro-industrial hubs across the country.